Controlling the Cost of an Ivy Education

On their webcasts last Monday and Tuesday, President Kim and Provost Folt were asked about the high cost of education. This topic is of some moment: the unfolding student loan debâcle and soaring college tuitions have led to congressional hearings and an Obama summit on the subject. In the webcasts, President Kim took pride in having reduced the College’s rate of cost growth from 8-10%/year to 3-4%/year. However, he did not address the College’s high annual price tag compared to our Ivy peers.

As we have seen before, the College has the highest nominal tuition in the Ivy League after Columbia.

However, you don’t have to be a hard-core quant to realize that Columbia and Dartmouth are not competing on a level cost field: the price of everything in Manhattan is far higher than it is in rural New Hampshire. The Council for Community and Economic Research (C2ER) has developed a calculator that compares expenses, including housing, utilities, transportation and health care, in dozens of major cities. The chart below uses data generated from an average of the four quarters ending March 2010 to compare the cost of living in the eight Ivy cities and towns. The results, which use Manchester, New Hampshire as a base, are detailed below:

The cost of living in New Hampshire is lower than any Ivy location other than Cornell’s Ithaca. The C2ER figures show costs for Manhattan to be 85.43% higher than they are in Hanover. From the perspective of an educational institution, this difference translates into a cost advantage for Dartmouth in salaries, construction, and virtually every other operating expense. Even employees for whom the College must compete in the national job market have an advantage in a place like Hanover: the amounts they they must pay for housing, parking and services are all markedly lower in Hanover than in Manahattan.

The chart below uses the C2ER figures to adjust the costs of an Ivy education as a reflection the local cost structure. Lo and behold, it looks like Columbia does a fine job of keeping tuition, room and board, and fees to a minimum. Given the high cost of doing business in Manhattan, in real terms, Columbia becomes the cheapest Ivy; Cornell become the most expensive, and Dartmouth is still the second most expensive institution.

Columbia’s President Lee Bollinger, who was the Provost in Hanover from 1994-1996, should pay Carol Folt a visit to show her how to rein in soaring costs. While President Kim may praise her efforts — as he did profusely in the webcast last week — in truth, she has not yet begun to cut. With the second lowest cost environment in the Ivy League, we should not have the second highest overall tuition and fees, no matter how you calculate them.

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